Vahe Davtyan: "Armenia faces serious geoeconomical challenges"

Vahe Davtyan: "Armenia faces serious geoeconomical challenges"

100 days after new authorities came to power in Armenia, economy of the republic is stil in a difficult situation, since Pashinyan's team, while declaring the beginning of a revolutionary course of economic revival, simultaneously refused to address the main obstacle to economic development - blockade at Turkish and Azerbaijani borders, caused by occupation of the territory of Azerbaijan. According to Pashinyan himself, borders with Iran and Georgia are enough to save Armenia from economic suffocation. Vestnik Kavkaza spoke to expert in the field of energy security, Vahe Davtyan, about possible prospects of the republic's economy in conditions of the unresolved Nagorno-Karabakh conflict.

- What will happen to the Armenian economy if blockade on Turkish and Azerbaijani borders will be lifted?

- According to estimates made by, for example, the World Bank experts, opening of borders with Turkey can lead to an increase in Armenian GDP by 30% and a significant reduction of current trade deficit. In other words, there are a lot of reasons to believe that our economy will begin to develop. Armenia and Turkey have potential for growth of economic cooperation in comparison to current situation. It's important to note that there's a trade between countries today, it's just carried out through third countries, Turkey ranks 6 or 7 in the foreign trade balance of Armenia, trade volume is around $300 million. At the same time, I believe that there are no such prospects with Azerbaijan.

I think we're not the only ones who are in a difficult situation due to closed borders with Azerbaijan and Turkey, it's a problem for the entire region, although from a conjunctural point of view it directly affects Armenia. Region should not have closed borders to ensure full-fledged economic development and healthy political and cultural dialogue. A large number of transport, logistic, energy projects are currently bypassing Armenia, although if they passed through the Armenian territory, it's possible that they would have greater economic efficiency. For example, there were proposals to build the Baku-Tbilisi-Ceyhan oil pipeline through Armenia, BOTAS spoke about logistical benefit of this route. I think that opening of borders will be interesting for all participants of regional processes.

- How will growing level of cooperation between Iran and Azerbaijan affect Armenian economy? After all, a significant part of disagreements between them are no longer relevant due to signing of the Caspian Convention.

- First of all, it should be noted that Armenia has recently faced serious regional challenges of geoeconomical nature. There are no direct risks from adoption of the Caspian Convention for Armenia, but if we view this issue in a strategic geopolitical sense, then we must recognize that there are potential risks. The Caspian Convention must be viewed as a system of additional mechanisms, which will regulate relations between the Caspian states, not only when it comes to the Caspian issue, but in a whole range of problems. In this sense, there are additional risks, anti-Armenian slogan in the Caspian states may become more popular.

The Caspian Convention is of great importance, including for development of energy and transport dialogue between all countries, in particular, between Azerbaijan and Iran. It's important to note that Azerbaijan is taking a certain niche in the Iranian market since the beginning of this year, it already Ppolitical platform for development of energy cooperation between Iran and Azerbaijan exists, but technically, Azerbaijan's energy system is not sufficiently diversified, which gives Armenia some time.

- When it comes to energy, what are Armenia's prospects in Iranian market? How will it compete with Azerbaijan?

- Electricity export is one of the main components of Armenia's economic development, but right now we have some problems in this field, associated with costs of electricity and logistics. I'm talking about problems associated with implementation of the North-South electricity corridor, which is supposed to link Iran, Armenia, Georgia and Russia. Despite the fact that construction works are already underway, formation of an alternative corridor through the territory of Azerbaijan has begun, and it's a challenge to the Armenian energy sector. Armenia needs to conduct aggressive marketing in regional energy markets and gradually reduce cost of electricity in order to remain competitive in Iranian and Georgian markets.

It's increasingly difficult for Armenia to maintain its status in regional markets, especially in conditions of transport, communication and logistics blockade or semi-blockade. We have to lower cost of Armenian electricity. In order to maintain low cost, we must deal with those huge loans that we have. It's also necessary to develop electricity consumption within the republic. Of course, I don't think that these goals will be achieved in one or two years, we need to keep in mind that they will take at least 5-7 years.